Premium
On the Targeting and Redistributive Efficiencies of Alternative Transfer Instruments
Author(s) -
Coady David,
Skoufias Emmanuel
Publication year - 2004
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.0034-6586.2004.00109.x
Subject(s) - economics , econometrics , categorical variable , welfare , public economics , microeconomics , index (typography) , computer science , mathematics , statistics , market economy , world wide web
The distributional characteristic provides an attractive alternative to conventional approaches used to evaluate the targeting performance of transfer programs. We decompose it into two components that are useful both conceptually and empirically; one capturing the targeting efficiency of the instrument, the other its redistributive efficiency . The redistributive index can also be generalized for the purposes of evaluating the degree of progressivity in tax‐benefit structures. For illustrative purposes, we present an empirical application of the distributional characteristic and its decomposition using Mexican data. The welfare gains from using categorical targeting and means testing reflect improvements in redistributive and targeting efficiency respectively.